Word: tariff
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...analysts foresee ripple effects almost beyond imagining. The prospect of a leftist victory has already caused a flight of capital abroad; if the Socialists and Communists won-and reconciled their differences-the left would have to engineer tough new restrictions on capital flow and, to save jobs, erect new tariff barriers. Such protectionism would isolate France within the European Community and gradually cut the country off from its trading partners. Even for Frenchmen, that is a prodigiously high price to pay for a free lunch...
Thus did Robert S. Strauss, Jimmy Carter's chief trade negotiator, size up the importance of last week's Geneva session in the 98-nation trade talks sponsored by the General Agreement on Tariffs and Trade (GATT). Started in Japan more than four years ago to lower international tariff walls, the so-called Tokyo Round talks have proceeded at a snail's pace-mostly as a result of U.S. preoccupation with Watergate, the Viet Nam pullout and the 1976 presidential elections. Last week the negotiations entered a new and decisive phase, when the U.S. followed Japan...
...Three now propose that tariffs should be cut by an average of 40%. The real reduction, however, will be less than 40% because every one of the 98 countries has a long list of industries and products that it wants exempted from the new foreign competition that tariff cuts would bring. The U.S. list includes color television sets, chemicals, shoes and special steels. The Europeans want to protect agriculture, cars, electronics and. like the U.S., shoes and steel. Also, the Europeans demand that the U.S. cut its comparatively high tariffs of 25% to as much as 108% on certain goods...
...Anyway, tariff cuts are no longer the only key to liberalizing trade. The Geneva negotiators will also try to dismantle many of the 800 to 850 NTMs (for "nontariff measures"), which are often deemed to be much more restrictive for international trade than tariffs themselves. NTMs range from straightforward quotas, to subtle and not-so-subtle local labeling requirements, to health, technical and environmental standards that can stop foreigners from freely entering another country's domestic market...
Unfortunately, any eventual pact could easily be scuttled if the leftists, who bitterly oppose dismantling tariff walls, win the forthcoming French elections. Furthermore, the Congress, which faces fall elections, could also refuse to ratify any agreement. Strauss does have the wholehearted support of President Carter, but this Congress has shown itself to be well aware that protecting home industries is an easy way to win votes. Indeed, protectionism has developed global momentum: GATT studies suggest that trade-restricting moves by various countries cost the world $30 billion to $50 billion in potential international commerce over the past three years. Noting...